Forward to the past!
A long time in China's gold trade was very limited. But times change, and in October 2002 in Shanghai Gold Exchange opened. Trading on the precious metal started successfully. However, a weak regulatory framework and the VAT to slow the development of stock exchanges.
Golden Tradition East
"Hong-g-g-g" - was a large bronze bell gongs. That sound is the traditional opening ceremony, all the great China for many centuries, this time to herald the official opening of the trading on the Shanghai Gold Exchange (Shanghai Gold Exchange - SGE).
Man, unfamiliar with the traditions of the East, it is difficult to imagine the love of precious metals, which is typical for the whole region. The Indian Maharaja famous unique collection of precious stones, gold and silver. Weight of women's jewelry made of gold in Cambodia to exceed one kilogram. A traditional Chinese dish - ravioli - still retains the form of an ingot of silver, who served until the beginning of XX century, the most popular means of payment and it symbolizes the desire of wealth. Perhaps that is why the "big world" of such a significant event as the opening of the Shanghai Gold Exchange, it was relatively unnoticed. Nevertheless date On 28 November 2002, could be a historic milestone not only for China or even Asia, but also for the whole world.
Gilded history
V1949, when the Communists came to power, proclaiming the establishment of People's Republic of China, gold in the country was forbidden even in the form of jewelry. Besides, most of the gold made (or rather, preserved) until such time as gomindanovtsy moved to Taiwan, and the creation of a new gold reserves the country has become one of the priorities of the government.
It is gold communists during the devastation and hunger bought food, equipment and medicines. Part of the gold production sent to the national bank as a reserve for possible military action. Despite the official ban, the vast quantity of gold remained in the hands of private owners. For example, during the Great Cultural Revolution in Shanghai, with searches requisitioned to 35 tons of gold ingots and coins, and 450 tons of jewelry. Until 1982, the possession of gold or jewelry in any form to be illegal and considered a crime. All the gold extracted in the mandatory surrender on the central bank to continue to relate to the principles of planned economy.
In 1982, after a certain improvement of the internal economic situation, the government allowed the people to buy gold jewelry. However, continuing in the 90's. monopoly has led to a kind of "contraband." Permission to jewelry made of gold, together with the active growth of the welfare of the population have led to a sharp increase in demand for products from it: if in 1989 the consumption was estimated at 40.3 tonnes, by 1999 - already 205 tons! This, in turn, led to an increase in gold production.
If in the early 50-ies. production amounted to only 4 tons per year, by 1999 - has 172.9 tons. However, industry was not ready for such rapid growth: the majority of enterprises are small mines with impoverished ore, antediluvian equipment and outdated technology. Most of them existed solely on government subsidies. But after the policy of open doors (80-ies. The last century), grants were limited to a minimum, a market economy has felt a sharp jump in energy prices (which is painfully familiar).
High overhead costs for the extraction of gold and rigid regulation of the market, where prices are fixed regardless of the world, led the company preferred to keep the portion of the yellow metal itself rather than surrender to the State deliberately low prices. Revived smuggling - the same bar of gold to cross the border several times, depending on where the price at this time was higher. According to unofficial data, the quantities of contraband that ranged from 50 to 400 tonnes per year. As a result, gold reserves fell by 2.1% compared with the 80-mi years.
Situation is quite paradoxical: monopoly and a complete inability to revive the industry by the state from one end of the consumer chain and the active market demand - on the other. The government faces tough dilemma: the liberalization of gold market or the emergence of the shadow economy, with all its consequences.
We can not say that the government stand watching the evolving situation. It has repeatedly tried to resolve the situation, but the decline in the price of gold on the world market brought all efforts to zero.
Save face
Brewing inevitable change. In the late 90's. unfolded in a strong debate on the possible liberalization of the import, export and sell gold in the domestic market. It was clear that half measures do not help. And the Government has decided to "open the gold market."
The decision really was a landmark one. Is worth mentioning that even after the settlement of the sale of gold jewelry to pass the state banned them back to stores. If you need jewelry to give up only in special units of the Popular Bank (NB) - the main Bank of China - at a price determined by them.
One of the first steps taken by the Chinese government, was treated to the World Gold Council (World Gold Council). He gladly helped develop the main points of the opening of the precious metals market
1, since the beginning of the new millennium, China, despite the poor condition of the gold-mining industry, is ranked fourth in gold production and a third - of its consumption.
In particular, they suggested the following steps: an active promotion of free circulation of gold in the form of jewelry or ingots, attracting foreign capital in the gold mining industry (it was not so much about money, how much of the equipment and new technologies), the establishment of the gold exchange, development legislative framework, regulations and taxation systems, as well as the gradual integration of China in World War gold market.
The path length of thousand miles ...
Chinese wisdom tells:
"The way a length of thousand miles begins with the first step." Following the decision in 1999, one of the oldest shops of Shanghai "Laofensyan formally granted the right to take the people to the committee of jewelry. The next step was to provide the People's Bank of China the right to set the price of gold without the approval of the State Council of China!
2 However, they were still flowers. According to the principle of "the party said," must "!..", the case took an active and earnest.
At the beginning of the new millennium, the Government announced the intention to create a market of non-ferrous and precious metals. However, since the statement was a principle, the terms have not been identified. Meanwhile, the surprising fact that the silver market was opened less than a year, though only for testing.
On the one hand, over the past two decades, China has already had experience in the creation of several national stock exchanges, including the country's two largest stock exchanges in Beijing and Shanghai. In addition, the Chinese have decided not to reinvent the wheel, and copy it. On the other hand, any other experience, other than monopolistic, the authorities were not. Perhaps that is why the probationary period the Exchange has been so long - more than a year. But this experience has allowed a more fruitful approach to the creation of the gold market. On the Stock Exchange announced plans to establish in early 2000, however, at the time officials have refrained from making any details - maybe the Government have not accurately represented, what, where and how should be done. Regarding the "where", it proved the easiest way.